Monday, December 5, 2016

Housing policy blunders

Controversial Inclusionary Housing proposal heading to City Council

The proposal, which became possible after the 2016 Oregon Legislature lifted the statewide ban on Inclusionary Housing, would require residential developers to include affordable units in multi-family projects with more than 20 units. It includes incentives intended to offset the revenue that would be lost by the lower-priced units.

Some developers say the proposal reduces the profitability of their projects too much, however, making it too difficult to obtain financing and potentially curtailing much future construction. Developers have submitted permit requests for up to 14,000 new units ahead of the council's potential vote on the proposal, a far higher number than usual in attempts to be "grandfathered" into the pre-Inclusionary Housing rules. "We've never seen this kind of rush to permit. I was shokced. It speaks to the inability to guess where the market will go," David Rosen, a national expert on Inclusionary Housing hired by the city to advise on the proposal, said at the Tuesday work session.

Two developers told the Business Tribune in early November that the proposal will increase housing costs for most new renters," however.

Vanessa Sturgeon, CEO of TMT Development, said the inclusionary zoning would make Portland more like San Francisco's model — "ultimately worse in affordability."

And Vic Remmers, owner of VWR Development and Everett Custom Homes, said he won't be able to develop at all in the city under the inclusionary housing proposal.

Even the Planning and Sustainability Commission that previous reviewed and recommended the proposal is concerned the incentives may not be strong enough.

Several multifamily developers have speeded up their new multifamily projects to avoid new restrictions on profits, increased housing costs, funding problems, and possibly creating a place that is less attractive to some renters or buyers. The code would be unfair to developers and renters when applied to only some parts of the city. Inclusionary zoning and rent control regulations inhibit new multiramily construction thereby worsening the problem of housing shortages and high prices. IZ is a bad idea.

"This is an art, not a science. The best way we can figure out if it's going to work is to go ahead and do it. There's been a lot of brainpower invested in this trying to get it right, and it now falls on us to take the plunge. I feel we have a reasonably crafted policy here. We can micromanage it forever in hopes of getting a perfect policy, but we're not going to get a perfect policy until we have a policy on the ground and a chance to recalibrate it as market conditions reveal themselves," Saltzman said at the work session.Wrong! There is plenty of science (economists' peer-reviewed research) that proves IZ and rent control do not work, and that they have the opposite effect than that intended. Arrogant politicians and bureaucrats think they can outsmart and manipulate markets by writing and re-writing regulations - bending economic and human behavior to be heir will. Where others have failed, they can do better. They can't! You can't make something happen just because you want it to, no matter what regulation is imposed.